Lawmakers seek relief for dairy farms

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Posted on July 23, 2009 |

WASHINGTON, D.C. — When the Vermont Milk Commission meets late this week in Montpelier, undoubtedly the discussion will focus to the precarious state of Vermont’s floundering dairy industry.

It’s a conversation that has spread beyond Vermont, as lawmakers’ efforts to drum up support and attention to the dairy crisis ramped up in Washington, D.C., this month.

But it’s also a conversation that has some dairy advocates asking just what federal legislators can and will do to turn around the dairy slump.

The milk prices being paid to farmers this summer continue to languish near $12 per hundredweight, several dollars below the cost of production. That means Vermont farmers are spending more than they earn to produce milk, and farmers across the dairy sector are receiving the worst prices for their milk in nearly 30 years.

“The crisis is urgent and real,” said Rep. Peter Welch, D-Vt., who testified earlier this month before a House Agriculture subcommittee that the Vermont dairy industry is on the verge of collapse.

Now Welch, and the rest of the Vermont Congressional delegation, are pushing first for short-term support for dairy farmers — largely in the form of subsidies — and then for long-term reform.

“The issue here is trying to … help get our farmers through the immediate squeeze,” said Welch. “The long-term goal is to do something that has long needed to be done, and that is to overhaul (the pricing system).”

That two-pronged approach to righting the listing dairy industry has cropped up in smattering of efforts in D.C. Earlier this month, Sen. Patrick Leahy, D-Vt., drummed up a small coalition of senators who sent a letter to Secretary of Agriculture Tom Vilsack. In a letter co-signed by Leahy and Wisconsin Democrat Herb Kohl, who chairs the Senate Agriculture Appropriations Subcommittee, the senators urged Vilsack to temporarily raise the price the government pays to buy surplus milk.

Congress granted the USDA the discretionary power to raise those prices in the 2008 Farm Bill.

Meanwhile, Sen. Bernie Sanders, I-Vt., has taken up a rallying cry against large food processor Dean Foods, which processes some 70 percent of the milk produced in New England. The Dallas-based company markets milk under brands like Dean’s, Garelick Farms and Horizon Organic. It also sells processed milk to major retailers such as Wal-Mart, Sam’s Club, Giant and Stop & Shop.

Sanders has pointed out that the drop in prices paid to farmers this year has not coincided with a drop in prices for consumers, which means profits for companies like Dean Foods are up 147 percent this year from last.

“While milk prices for the farmers are plummeting … Dean Foods has seen a huge increase in their profits,” said Sanders, who is pushing for Dean Foods executives to meet with Vermont farmers to determine how farmers can receive a fair price for their milk.

But dealing with processors is just one area Sanders has pinpointed as a way to relieve the dairy crisis. In a letter of his own to Vilsack, Sanders outlined seven suggestions for helping dairy farmers, including investigating milk processors for abuse of monopoly powers, adjusting the federal milk marketing order system to reflect regional costs of production, and increasing USDA purchases of dairy products for nutritional programs.

“We are losing farmers,” Sanders said. “It really is a disaster for the economy … and the environment of our state.”

Sanders and Welch have both said that the easiest, most effective short-term treatment for the dairy crisis is to substantially increase the payments that farmers are getting through the Milk Income Loss Contract (MILC) program. MILC payments kick in when federally set milk prices fall below a benchmark. Welch has pushed for an increase in the MILC payment rate from 45 percent to 79 percent.

Approval of these sorts of short-term fixes — solutions that Welch said would, at the very least, help tide farmers over until milk prices recover — face what he dubbed an “uphill battle” in Congress.

Despite these efforts in Washington, some local dairy experts have expressed skepticism about just how effective legislative efforts will be in reforming the dairy industry.

HOPE FOR CHANGE?
Leicester resident and former organic dairy farmer James Maroney, who has written a book about dairy farming and the economy, says that lawmakers will never put the interests of dairy farmers above the interests of their other constituents.

“Mr. Sanders and Mr. Welch will not do anything that causes the price of food to rise,” Maroney said. “There’s no way to help farmers unless you do that.”

Maroney also expressed doubts about temporary “fixes” to the dairy industry. Bolstering the MILC program, he said, just supports a system that codifies the word “loss” in its name.

“It presupposes that dairy farmers are losing money,” Maroney said. “They can fool with those programs all they like. It’s never going to make a difference to farmers, not the difference they want.”

Of Sanders’ suggestions, Maroney said, only one — raising the standards for quality milk by tightening somatic cell count restrictions — would actually help farmers.

And even that wouldn’t cut the milk supply enough to make a dent in what Maroney said is a 9 billion-pound glut of milk on the market.

Maroney argued that only by trimming that oversupply of milk can farmers begin to earn more money for their product. Right now, that means cutting overall production by 5 percent, or 500,000 cows. The plans that Welch and Sanders are proposing, by Maroney’s calculations, would cut production by less than 1 percent.

“That will not change the price,” he said. “They have a larger constituency to protect than farmers, 99 to one. The farmers have no chance.”

Sanders pointed out that, to his mind, protecting dairy farming is in the long-term best interest of all Vermonters. In part, that’s because dairy constitutes the vast majority of agriculture jobs in the state, and supports jobs in ancillary farm supply industries.

“The jobs that dairy creates are not just on the farm,” Sanders said.

But he also pointed out that the work dairy farmers do supports Vermont’s tourism industry.

“Dairy farmers, probably more than any other segment of our state, maintain the open fields and the beauty that makes Vermont a tourist attraction,” he said. “For a number of reasons, it is imperative that we protect our dairy farmers.”

Given that dairy farmers across the country have been hard hit by this particular downturn in prices, Welch said members of Congress who represent districts where milk is produced have been receptive to the conversation about dairy.

LOCAL AGRICULTURE
Meanwhile, when it comes to convincing the nation as a whole to pay attention to tiny Vermont’s flagging dairy industry, Welch said the conversation needs to be about local foods in general and not Vermont dairy in particular.

On average, Welch said, food in American travels 1,500 miles from farm to table.

“The more local agriculture we can have, the better it is for nutrition, for energy savings, and for the environment,” he said. “It’s not just about dairy. It’s about local agriculture … Dairy fits in the context of the question our country has to face (about food production).”

But in Vermont, farmers don’t need to be persuaded to sit up and take notice of the conversation about dairy.

“My goal is to put my head down and do everything I can, to leave no stone unturned,” said Welch.

And for that, some local farmers are grateful.

“I applaud the legislators for acknowledging the problems that we’re having. That being said, dairy farmers recognize that these are short-term solutions,” said Marie Audet, a dairy farmer in Bridport.

What Audet and the farmers she’s spoken with want, she said, is a long-range solution for moving away from tax-funded programs like MILC.